The Difference Between Scenario Analysis and Sensitivity Analysis Is That

question 62

Multiple Choice

The difference between scenario analysis and sensitivity analysis is that

• A) scenario analysis is based upon the IRR and sensitivity analysis is based upon NPV.
• B) only sensitivity analysis allows us to change our estimated inputs of our NPV analysis.
• C) scenario analysis considers the effect on NPV of changing multiple project parameters.
• D) only scenario analysis breaks the NPV calculation into its component assumptions.

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Definitions:

Conditioned Stimulus

A formerly neutral signal that, after consistent association with an unconditioned stimulus, triggers a learned response.

Unconditioned Stimulus

In classical conditioning, a stimulus that naturally and automatically triggers a response without prior conditioning.

Conditioned Response

An automatic response established by training to an ordinarily neutral stimulus after association with an unconditioned stimulus.

Unconditioned Response

A natural, automatic reaction to a stimulus that occurs without the need for learning or conditioning.